Unsure of buying bonds right now? Try bond laddering

— -- Q: I'm attracted to the safety of bonds, but is this a bad time to step into the bond market?

A: Investing is all about buying low and selling high. Sounds easy, right?

That goal of investing is the same no matter whether you're buying stocks, mutual funds or bonds. You want to buy when the price is low and sell later for a profit.

With bonds, buying at a low price can be even more lucrative in an ongoing way. Let's say you buy a $1,000 bond that pays $50 a year in income. That's a 5% annual yield, or $50 divided by $1,000. If you pay just $700 for that bond, though, the yield rises to 7.1%, or $50 divided by $700.

So we all agree that paying low prices is a good thing.

Here's the problem: There's often no way to know at any point in time whether or not the current price of an investment is going higher or lower in the future. That cruel reality of investing is the reason why it's impossible to answer your question the way you'd probably like me to.

And you are wise to be cautious. After all, one of the biggest dangers for bond investors is inflation. That's because bond investors generally accept fixed interest payments. If prices skyrocket and interest rates rise, then those fixed payments on that bond you just bought at today's rates may not be adequate.

What should you do then? Rather than fixating on whether bond prices are low or high, you should use laddering. Bond laddering is the technique of building a portfolio of bonds that mature at different times in the future. That way if interest rates do rise in the future, you can replace the bonds that mature first with new bonds at the higher rates.

You can learn all about bond laddering and how to do it here: Investing: To rise above bond risk, build a Treasury ladder

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz